Since the late 1990s, China has taken strong measures to protect and grow its own forests. At the same time, it has built a vast wood processing industry reliant on imports for most of its raw materials supply.

Although much of the wood processing sector is export-oriented, the vast construction effort in China, coupled with increasing wealth, is creating a surge in domestic demand for timber products.

In a new report Appetite for Destruction, China’s Trade in Illegal Timber, the Environmental Investigation Agency (EIA) highlights that China is now the biggest importer, exporter and consumer of illegal timber in the world. In 2011, for example, China imported 180 million cubic meters of timber and wood products, with the top two exporting countries being the USA and Russia.

About 80 million cubic meters of this were logs and sawn timber, and of these an estimated 18.5 million cubic meters were illegal – that is to say, 23 per cent of the total Chinese imports of logs and sawn timber for 2011 were from illegal sources. That total is worth approximately US$3.7 billion, demonstrating the massive profits accrued from illegality.

This timber is coming from high-risk countries with weak governance, most of which are incapable of stemming the illegal flow of timber; countries such as Indonesia, which has the third largest expanse of tropical forests worldwide and so is a crucial player in terms of carbon sequestration, thus helping avoid climate change.

At the peak of illegal trade, the EIA estimated that at least 1.6 million cubic meters of logs a year were being smuggled from Indonesia to China, with 300,000 cubic meters a month of Merbau smuggled from Papua.

The release of the 2005 EIA report The Last Frontier first exposed this illegality and prompted the then Indonesian Government to launch a crackdown on illegal logging in Papua; within a few months, a team of more than 1,000 enforcement personnel had stopped the flow of illegal Merbau shipments to China – and as a result, the price of Merbau in China had trebled to reach $700 per cubic meters as the supply of illegal logs dried up.

But the trade in illegal timber for China then switched borders to other countries, including and especially Russia.

Russia was by far China’s top log supplier in 2011, with exports of 14 million cubic metres. Appetite for Destruction highlights the fact that 35-50 per cent of total harvests in the Primorsky region, and 35 per cent of the Khabarovsk Krai regio, are illegal, primarily due to the timber trade with China.

Meanwhile, in South-East Asia it is estimated that in Myanmar illegal log exports across the Yunnan border into China rose to almost 500,000 cubic meters annually by mid-2012, while in Africa the adverse effects of the timber trade with China have been multifarious.

In 2011, Mozambique registered exports of 36,000 cubic meters of logs to China, yet China recorded imports of 230,000 cubic metres from Mozambique of the same products - a massive discrepancy.

In Madagascar, due to a military coup in 2009 that led to a complete breakdown in the rule of law in the forests of the north-east, the first months of 2009 saw up to 200 trees a day illegally extracted from two national parks in the north-east Sava region. The trade was estimated to be worth between US$88,000 and US$460,000 daily. Investigations by EIA in 2010 indicated that Chinese traders in Sava region were buying more than 95 per cent of the supply, with the majority of it again exported to China.

This illegal trade has harmful effects on the legitimate timber trade from all these countries, with millions lost in state revenue. It also causes harmful deforestation, loss of biodiversity, greater vulnerability to forest fires and lost carbon sequestration, as well as undermining sustainable forest management and marginalising poor communities which rely on forests for their subsistence.

The corruption in these countries, fuelled by profits from illegal logging and driven by demand from China, has grown to such an extent that it is now undermining the very rule of law, principles of democratic governance and respect for human rights.

The European Union, the USA and Australia have all recently passed legislation banning the import of illegal timber into their markets, with the passage of the European Union Timber Trade Regulation, the Lacey Act in the USA and the Illegal Logging Prohibition Bill in Australia. We want China to follow suit and pass into law similar legislation to ban imports of illegal timber into its markets.

EIA argues that it is important to place responsibility for eradicating China’s illegal timber trade in the hands of a formal coordinating body comprising senior officials from the Commerce and Foreign Ministries, as well as the State Forest Administration (SFA), while revising the voluntary guidance provided to Chinese companies operating overseas to make it mandatory.

The EIA also believes that China should institute laws that criminalise corruption or bribery of foreign officials by Chinese companies, in line with anti-corruption legislation instituted in the UK and the USA.

The evidence makes a clear case for action by China. It needs to take measures to exclude illegally logged timber from its market – and to understand that the fate of many of the world’s natural forests depends on this.

Chris Moye is a Forests Campaigner for the Environmental Investigation Agency (EIA)